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What is Foreclosure?
Foreclosure is the legal process that allows your lender to sell your property in a trustee sale auction in case you default on the mortgage payments.
Foreclosure Timeline
Pre-foreclosure Period
Once you stop making your payments, your lender may take two, three, four, five or more months to file foreclosure. Each lender is different.
Lender Contact to the borrower
Some loans require that the lenders to contact the borrowers by phone or in-person to asses their financial situation and see what options to avoid foreclosure are available to the borrowers.
Usually is 30 days before filing the Notice of default.
Day 1- Notice of Default (NOD)
A lender may file a Notice of default 30 days after contacting the borrower and offering options., please note this requirement doesn’t apply to all loans,
The Notice of Default (NOD) informs the borrower about the default. This notice is filed in the county where the property is located. This information becomes public records. The notice will be mailed to the borrower, in some cases delivered by the lender’s attorney or posted at the property
Once the notice of default is filed against the property, the borrower has 90 days to
- Cure the foreclosure by paying off all back due to payments,
- come to an agreement with the lender
- sell the property.
After 90 days, the notice of default has filed the lender will file the notice of trustee’s sale.
Day 91- Notice of Trustee's Sale
The notice of trustee sale is usually filed 3 months after the Notice of default was filed.
The trustee’s sale notice is to inform the borrower that the property will be sold in a public auction.
It would have the Date, time of the sale. As well as the minimum opening bid the lender is willing to take to sell the property. Usually is the balance owed by the borrower, including back payments and fees.
The notice of trustee sale must be posted at the property recorded, mail it to the borrower and other interested parties. Trustee sales must be published once a week for three consecutive weeks in a newspaper.
Lender can execute the trustee sale after 20 days of filing the Trustee sale Notice, but they usually wait more that 21 to 31 days or more to do it
Day 116 Deadline to cure the default
Usually up to 5 days before the trustee’s sale date. The borrower may reinstate the loan by paying all back due payments plus any late fees the lender is charging.
After this period expires the borrower still is allowed to pay off all the loan, plus interest incurred up to the day of payoff. This could happen anytime before the trustee’s sale.
Day 121 Trustee Sale
At the trustee sale, the property will be sold to the highest bidder. If no bidder is successful buying the property the lender will take the property back as a Bank Owned
